Well, if they’re not selling the dog-and-soda combo for a loss, they’re pretty damned close to that.
What’s included?
Per unit costs:
1. It’s a 1/4-pound beef frank. Granted, the lowest grade beef is used for hot dogs, but nonetheless it’s pretty tasty.
2. Bun. It’s a large roll with sesame seeds.
3. Paper or foil wrapper
4. Paper cup
5. Drinking straw
6. Soda-cup lid
7. Pepsico soda syrups
8. Carbonated water
9. Ice
10. Condiments (mustard, ketchup, relish
Then you get into related expenses;
Snack bar employee salary and benefits
Point-of-sale order kiosk equipment
None of this is free.
Never mind. I’ve never had the Costco hot dog.
There is a fine line between t-asty and n-asty.. :)
Pepsi would give their product away to keep the competition’s name out of it.
It costs $60 per year for a Costco membership. $120 per year if you have an “executive” membership.
I remember several decades ago talking to a Kmart executive shortly after Walmart had eclipsed Kmart as the largest retailer. He mentioned a decision the beancounters had made to eliminate the in store lunch counters because they were losing money.
Apparently during the day non-working female shoppers were meeting at the lunch counters for lunch. These in-store restaurants were losing money. After K-mart eliminate the lunch counters as a cost savings, store traffic and sales dropped. The bean counters, only looking at the losses didn’t understand they were social centers that attracting shoppers to congregate, socialize, and most importantly spend money in the store.
Likewise Kmart eliminated its signature “blue light special” which featured heavily discounted products. This in-store promotional program created excitement and sales in the store. Again the bean counters could see only the lose on the featured item, not the full price merchandise begin checked out with the blue light special.
James Sinegal, the founder of Costco, was a visionary who understood the mindset of Costco customers. The CFO, sitting in his/her office staring at a spreadsheet on a PC knows little about the psychology of the customer roaming the store. Sinegal understood the hot dog brought customers to the store who spend hundreds of dollars on other very profitable items each time they visit a Costco store and savor the $1.50 hot dog.
Many of America’s once great retailers have disappeared over the past 50 years (Sears, Kmart, Woolworth) after narrow minded beancounters and private equity owners put cost cutting over the customer experience.
Long live the $1.50 hot dog. The day the price increases to $2.00, $2.50 or whatever, you will know Costco has started down the slippery cost reduction slope to extinction.